Poverty: Measurable or Immeasurable? | Shahid Soomro

How should we measure poverty? It is a question that has created enormous controversy in the developing world including Pakistan. Poverty is a complex phenomenon influenced by a large number of factors and can be studied from many different perspectives. We all know that the study and interpretation of poverty isn’t a simple task, as there are as many ways of measuring poverty, as there are ways of defining it. Poverty is defined by various disciplines like social, scientific and cultural. Economics considers relative and absolute poverty. Politics takes it as a fight to attain social goals and has some dedicated institutions to tackle it. However their work is mostly limited to Census studies and identification of some income level below which a citizen is considered poor. In Law it is recognised as permanent state of need, which can affect and alter the correct capability of identifying the legally and socially acceptable behaviour. Poverty is also believed to cause increased crime amongst the poor by increasing their stress level. Poverty in Education badly affects a student’s ability to profit from the learning environments.

Although Pakistan has made some progress in measuring poverty, there is still lot to be done. The UNDP in its report titled ” Sustaining Human Progress: Reducing vulnerabilities and building resilience” has shown some positive trends in Human development but has also warned that people are still experiencing threats and challenges to their wellbeing and this is mainly attributed to the lack of poverty measurement at the grass root level. It is a shocking fact that South Asia has the largest multidimensional poor population with more than 800 million poor and over 270 million near poor, which constitutes 71 percent of its population. Globally HDI (Human Development Index) is used to see if the country is developed, a developing or an under developed. Economist Dr Mahbubul Haq is credited to have developed this index. The HDI assesses long-term progress in three basic dimensions of Human development that is life expectancy, education and purchasing power parity based on Gross National Income. Pakistan is ranked 147 out of 188 countries in HDI and is placed in the Low Human Development category. Interestingly Bangladesh is ranked at 142 where as India is at 130.

Now let’s see some poverty measurement tools that have been used in the world. I have selected two such tools, which are used for measuring poverty in the developing countries. First, we discuss Proxy Means Test (PMT). This methodology has been used in Bangladesh, Indonesia, Rwanda, Sri Lanka and Pakistan.

The PMT is based on national household surveys covering household’s assets and other indicators or proxies to estimate welfare. However, there is a dire need that these proxies need to be easy to measure. In most of the cases these proxies include age of household members and size of household, education of household and enrolment of children in school, physical housing characteristics such as type of roof or floor, durable goods and productive assets such as land or animals. These proxies during the survey (usually between 10 and 30) explain welfare of the household. Each proxy is then assigned a weight based on its estimated impact on household expenditure.

Enumerators visit households to see if they have the proxies being used in the PMT. These proxies are given the agreed weights to calculate a score for each household. Households that come with score that is below the cut-off point are eligible for the social protection programme.

This technique assesses regression accuracy but according to experts has some inbuilt errors. At low levels of coverage say 20 percent of the population the exclusion and inclusion errors vary between 44 and 55 percent and this error percentage increases with the decrease of population coverage. This is mainly due to imperfect correlation between proxies and household consumption. Additionally, the PMT methodology is based on national household survey data that represent ‘reality’ at one point in time and are inherently inaccurate to varying degrees.

According to AusAID assessment of the PMT methodology, Implementing proxy means testing poses a number of challenges. Enumerators are not always objective while conducting surveys and do not always concentrate to verify proxies within households. There are some proxies that can also be difficult to verify-such as level of education, age and household assets-and interviewees can influence survey results, with children and men not as reliable as women. Needless to say that many countries have experienced this situation.

Another challenge of proxy means testing is related to crises and shocks faced by households, including minor ones that are part of everyday life. As a result, households that fall into poverty but do not suffer a related change in the household characteristics and assets used as proxies cannot receive social protection benefits. We should also be mindful of the fact that PMT at large scale requires strong monitoring and evaluation (M&E) system. Unfortunately M&E history in the developing countries has not been up to the mark and due care should be taken before using this method of poverty measurement.

The second tool I have selected to measure the poverty is Multidimensional Poverty Assessment Tool (MPAT). This tool has been developed by the United Nations’ International Fund for Agricultural Development (IFAD) in 2007 in collaboration with other UN agencies, International and regional organisations. The tool has been piloted and tested many times and has gone through a series of revisions and modifications based on the feedback received from workshops and on site tests in various provinces of India and China. The MPAT is a survey based thematic indicator that provides an overview of ten dimensions relating to poverty in rural areas and human welfare. These ten dimensions are Food and Nutrition Security, Domestic water supply, Health and healthcare, Sanitation and hygiene, Housing and energy, Education, Agricultural assets, Non-agricultural assets, Exposure and resilience to shocks and Gender equality. First six components are largely founded in the basic needs theory and are founded upon the notion of need. The other four go beyond immediate physical and cultural needs and address fundamentally relevant dimensions of rural life. The MPAT has developed a Check-Score-Card system to optimise the data quality collected from the household and village surveys. The CSC is based on three-part system, which is different from the traditional methods and takes longer but if done correctly then it ensures that the data will be free from data coding and entry errors. The MPAT unlike PMT has been subjected to rigorous evaluation by third parties like European Commission, Journal of Development studies and Wageningen University to name a few. Apart from this there is comprehensive training program for enumerators to collect the data effectively. This tool has the capability to be customised to incorporate certain logical frameworks of Monitoring and Evaluation and provides ways to bring corrective measures.

We know that about 75 percent of the world’s poor live in rural areas but how do we assess and measure rural poverty to help decision makers to eradicate it. The MPAT is simple and innovative tool and can help answer this question.

(The writer is a Certified Professional in Monitoring and Evaluation and Additional Commissioner, Inland Revenue Service. Presently posted as Director MIS Benazir Income Support Programme)

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